Eurozone finance ministers broadly supported the use of bailout fund, or the European Stability Mechanism, to help those member countries struggling hardly with the coronavirus outbreak.
After the Eurogroup video conference on Tuesday, President Mário Centeno, said leaders took stock of all the measures already taken and also of the initiatives that are being explored among institutions to tackle the economic crisis caused by the coronavirus outbreak.
There is broad support to consider a Pandemic crisis support safeguard based on an existing ESM precautionary instrument, he said.
The size of the available instrument could be in the range of 2 percent of members’ GDP, as a benchmark, Centeno said.
“While there is broad support among members around these features, more work is needed on details.” The decision will be taken at the meeting of the leaders on Thursday.
The precautionary credit line is the most suitable instrument to respond to the corona challenge, particularly the precautionary credit line called ECCL, or Enhanced Conditions Credit Line, ESM Managing Director Klaus Regling, said.
A precautionary credit line, the ECCL in particular, would be available for all member states of the euro area, but it is up to every member state to decide whether they want to apply for it or not, Regling added.
This could be adjusted possibly in view of the severity of the spreading of the coronavirus and its economic impact. If a credit line is drawn, the funds would be used to finance the country’s immediate health care and economic responses to the crisis.
Responding to a question on the maximum size of the credit line, Regling said it could go up if there is a particularly serious case, but that is not decided yet. “There was today a broad consensus around this 2 percent number.”
The reluctance to agree on corona bonds or other forms of clear burden sharing, at least for now, means that a euro debt crisis could return in the aftermath of the current crisis, no matter when this will be, Carsten Brzeski and Bert Colijn, ING economists said.
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